If we don’t take risk, we don’t progress. Taking risk intelligently is the only way organisations can reinvent and transform to survive, create value and prosper in this time of uncertainty, while building resilience to protect value in the face of complex, ever-changing risk. PwC’s Global Risk Survey 2023 reveals how leading organisations are changing the way they see risk by embracing the transformative power of technology and data in pursuit of opportunity and value creation. The research—which surveyed 3,910 business and risk leaders globally and 151 responses from Australia, from the boardroom and C-suite, across tech, operations and finance, as well as risk and audit—also highlights how technology is playing an increasingly important role in helping organisations protect value by mitigating and managing downside risk more effectively.
Risk management is shifting from value protection to value creation
The transition to new energy sources is seen as the biggest opportunity among external disruptors, cited by 52% of respondents, closely followed by changes in customer demand and preference 48% which is aligned to the opportunities identified by global business and risk leaders. By contrast, supply chain disruption is the main external factor seen as more of a risk than opportunity, cited by 49% of respondents followed by changes in regulation 37% globally and within the Australian market. Industry sector also has an impact on whether organisations sit at the value protection or value creation end of the risk appetite scale. Those in faster moving sectors, such as retail and tech, are more likely to embrace risk and seek opportunity, while those in regulatory driven sectors such as government and financial services are more likely to prioritise compliance and focus on risk avoidance. Different functions within the organisation also have different perspectives on risk, with information security roles (60%) followed by finance and operations (43%) more likely than others to say their organisation is focused on risk avoidance over a high risk appetite.
Technology is impacting the way Australian organisations see risk
Technology is playing an increasingly significant role in shaping Australian organisations’ exposure to risk, their appetite for taking risk in pursuit of new opportunities, and the tools they are using to mitigate it and build resilience.
Cyber, remains the top tech-related threat ranks the highest in terms of the risks, Australian respondents feel most exposed to (35%), while other digital and tech risks are almost on a par with inflation risks (25% and 26% respectively). Australians have placed less emphasis on geopolitical changes and conflicts this year in comparison to last year. (13% vs. 19% respectively).
The key characteristics of Risk Pioneers
Our survey shows a fairly even spread of Risk Pioneers across most industries. They are particularly prevalent in financial services, retail and consumer, technology, media and telecoms, and from organisations with revenue of USD$5bn or more. Respondents are more likely than the survey average to be CEOs and the board (34%) and their organisation is more likely to have seen revenue increase in the past six to nine months and be expecting it to increase again in the next 12 months. Almost three quarters (73%) of Risk Pioneers also have an enterprise wide technology strategy and roadmap, which includes investment in technology specifically to drive resilience and/or manage risk—compared to 53% of overall survey respondents.
Underpinned by strategic enterprise wide resilience and guided by a human-led, tech-powered approach, these pioneers are significantly more likely than other organisations to be upskilling internal teams and making greater use of advanced analytics, predictive modelling, cybersecurity tools and cloud to navigate risk. And they are more likely to see emerging technologies such as GenAI as an opportunity rather than a risk.
Closing the gap — Five ways you can be a Risk Pioneer
1. Match technology ambition with action
There is clear ambition among most organisations to take a more tech-powered approach to risk, seen by their intention to invest in AI, machine learning, automation, cybersecurity and cloud. But many are still at relatively early stages of maturity in their use of technology and data for managing risk.
Only 8% of Australian organisations report using using advanced and predictive risk management capabilities using leading-edge technology and data. Compared with global peers, Australian organisations report a higher impact of legacy technologies on their ability to effectively manage risk.
2. Put purpose at the heart of your risk strategy
An approach to risk led by a clear and authentic purpose can help organisations be more resilient and guide which risks to embrace or avoid. It ensures the whole organisation understands the direction and ambition for the future, and helps build trust with stakeholders—from employees and customers to investors and regulators.
Purpose provides a vital strategic lens on whether a risk is more threat or opportunity, particularly around issues such as climate change, sustainability, ethical supply chains and the responsible use of emerging tech, such as GenAI. Yet only around a quarter (24%) of Australian respondents say they strongly agree that their organisation uses purpose and vision for the future to make decisions about risk (compared to 32% of global organisations). Positively, 72% of Australian organisations are using risk information to inform strategy and planning decisions, compared with just 64% of global respondents.
3. Fix the leadership disconnect
Most Australian organisations (93%) are confident they can balance growth ambitions with managing risk effectively, but there are differences when we analyse responses across different job roles and functions.
For example, 40% of Australian CEO and board respondents are very confident of balancing growth and risk, compared to just 30% of finance & operations leaders and 25% of risk & audit leaders.
4. Build a foundation of strategic resilience
There is a close link between resilience investments and achieving risk management outcomes, with better performing organisations more likely to have invested across more resilience initiatives in the last 12 months. In the Australian context, there are multiple regulatory tailwinds (including CPS 230, SOCI) driving this investment forward, and leading organisations are taking this opportunity to not only deliver compliance, but also enhance their resilience maturity.
5. Create a culture where diverse and bold thinkers can thrive
Ambitions of making risk a strategic capability that helps organisations to take on risk with confidence and unlock new opportunities and sources of value must be matched with the development of culture, skills and capabilities. Another key growth mindset behaviour evident in top performing organisations is detoxifying failure through a ‘safe to fail’ culture, where employees feel they can experiment and adapt to different circumstances. However:
- Only 26% of Australian organisations say they strongly agree that upskilling teams to be better prepared for potential risks or that providing employees with the right skills to better enable them to solve complex problems are a priority, compared to 60% and 58% of Risk Pioneers respectively
- Just over a quarter of Australian organisations (26%) strongly agree their organisation has a safe to fail culture, compared to half of Risk Pioneers.
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